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European Energy Stocks Gain as U.S.-Iran Tensions Drive Oil Prices Higher
European energy stocks rallied on Monday as escalating military tensions between the United States and Iran over the weekend triggered a sharp increase in crude oil prices, fueling investor concern over global energy supplies.
Geopolitical Tensions Fuel Oil Rally
The gains followed reports of fresh military exchanges between the U.S. and Iran, culminating in an announcement from Tehran that it had once again closed the Strait of Hormuz. Iran's Revolutionary Guards also stated on Monday they had targeted American military installations in Kuwait and Bahrain, according to the source material.
The developments cast significant doubt on an interim agreement signed last month, which was intended to reopen the vital shipping lane. In response to the heightened supply risk, oil prices jumped:
- Brent crude futures rose 2.9% to $78.24 a barrel.
- U.S. West Texas Intermediate (WTI) crude gained 2.7% to $73.34 a barrel.
Energy Sector Leads European Equities
The surge in crude prices directly benefited European energy producers, making the sector a top performer. The STOXX Europe 600 Oil & Gas index climbed 1.2% in early trading.
AdMajor oil and gas companies saw their share prices advance, including:
- BP (+2.3%)
- Repsol (~2%)
- Shell (+1.1%)
- TotalEnergies, Eni, and Equinor (gains between 1% and 2.1%)
Strait of Hormuz Disruption
The closure of the Strait of Hormuz presents a significant threat to global energy markets. Before the conflict began, the waterway handled approximately one-fifth of the world's daily oil and liquefied natural gas (LNG) supply.
Data from ship-tracking firm Kpler highlighted the immediate impact of the shutdown, with vessel traffic through the strait falling to a five-week low on Sunday. Kpler reported that only six vessels made the transit.